Low Existing Home Inventory Drives Sales Up In Master-Planned Communities

With high-interest rates causing many homeowners to stay put, sales of new homes are gaining traction — especially in master-planned communities that buyers perceive as a safe investment in a community perceived as high quality.

A recent report from RCLCO Real Estate Consulting found that new home sales on its list of the 5-top-selling Master-Planned Communities increased by 9% compared to the pace set by the top communities in the first half of 2023.

Florida accounted for about 41% of sales among the ranked communities, followed by Texas with nearly 39%.

The Houston metropolitan statistical area (MSA) was the top-performing metro with 13 communities in the top 50, representing nearly 24% of all sales among the ranked master-planned communities.

“Texas punches above their weight in terms of new home sales, generally,” RCLCO Principal Karl Pischke said. “It’s driven by strong household and job growth. Despite some of the volatility in energy, they’ve continued to see record growth over the last two to three years.”

Texas also has large tracts of land available and supports public financing districts that help developers finance infrastructure.

Because of high-interest rates and low inventory, the pace of single-family home sales is slow, which can be a positive influence on new home sales.

The number of new homes completed during the first half of this year is higher compared to the same time last year, with estimates for June showing a 5.5% seasonally adjusted year-over-year increase. But new permit activity as of June is about 15% lower compared to the previous year, which suggests a more modest forecast for overall new home volume in 2023.

New home prices are still high but have moderated at an average of $487,300 nationally — a 7% decline compared to the same month last year. The size of new homes tends to increase during economic expansions, but when the market slows, smaller, more attainably priced homes help builders maintain the pace of sales.

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For example, Lakewood Ranch in Florida introduced three new entry-level villages, which was a key factor that pushed its sales up 20% through the first half of the year.

“Active adult sales remained strong, and builders did the rest by offering relief on closing costs to get move-up buyers across the finish line,” said Laura Cole, senior vice president at Lakewood Ranch.

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